Commvault prices upsized $785 million convertible notes offering

TINTON FALLS, N.J. - Commvault Systems, Inc. (NASDAQ:CVLT), an $8.3 billion market cap data management software company with impressive gross profit margins of 82%, has priced an upsized private offering of $785 million in 0% Convertible Senior Notes due 2030, the company announced Tuesday. According to InvestingPro data, the company currently appears overvalued against its Fair Value, despite maintaining a strong balance sheet with more cash than debt.

The offering, initially set at $750 million, was increased by $35 million and is expected to close on September 5, subject to customary closing conditions. The notes were offered to qualified institutional buyers under Rule 144A of the Securities Act. The company’s solid financial position is reflected in its ability to cover interest payments through cash flows, as highlighted in InvestingPro’s analysis, which offers 13 additional key insights about the company’s financial health.

The convertible notes will have an initial conversion price of approximately $236.88 per share, representing a 32.5% premium over Commvault’s last reported stock price of $178.78 on September 2.

In connection with the offering, Commvault entered into capped call transactions to reduce potential dilution from the notes. The cap price was set at $357.56 per share, a 100% premium over the company’s closing stock price on September 2.

The company plans to use approximately $86.9 million of the net proceeds to fund the capped call transactions and about $117.7 million to repurchase approximately 0.66 million shares of its common stock. The remaining proceeds will be directed toward general corporate purposes, which may include acquisitions or strategic investments.

The notes will not bear regular interest, and the principal amount will not accrete. Noteholders will have limited conversion rights before March 15, 2030, after which they may convert their notes at any time until maturity.

Commvault also granted the initial purchasers an option to buy up to an additional $115 million in notes within an 11-day period.

The notes will not be redeemable before September 22, 2028. After that date, Commvault may redeem the notes under certain conditions, including if the company’s stock price exceeds 130% of the conversion price for a specified period.

According to the press release statement, the notes and any shares issuable upon conversion have not been registered under the Securities Act and may not be offered or sold except pursuant to an exemption from registration requirements. With revenue growth of 21.6% over the last twelve months and strong financial metrics, investors seeking deeper insights into Commvault’s valuation and growth prospects can access comprehensive analysis through InvestingPro’s detailed research reports, which provide expert analysis on over 1,400 US stocks.

In other recent news, Commvault has introduced two new additions to its HyperScale portfolio: HyperScale Edge and HyperScale Flex. HyperScale Edge is aimed at remote sites with limited IT resources, while HyperScale Flex targets high-performance backup for data-intensive workloads. Commvault’s recent fiscal first-quarter performance has garnered attention, with KeyBanc raising its price target for the company to $225, citing strong annual recurring revenue figures. RBC Capital also increased its price target to $217, highlighting the company’s robust financial results and guidance. Cantor Fitzgerald raised its price target to $189, noting the company’s 5% revenue beat, driven by large Term license deals. Guggenheim followed suit, adjusting its price target to $220, acknowledging strong growth in data protection. The company reported organic constant currency net new annual recurring revenue of $40 million, marking nearly 20% year-over-year growth. These developments reflect a pattern of Commvault exceeding expectations and receiving favorable analyst evaluations.

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